Multiple Choice
Which of the following best describes a negative externality in terms of social costs and benefits?
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7. Externalities
Externalities: Social Benefits and Social Costs
Multiple Choice
Which of the following activities is most likely to result in an external benefit?
A
Getting vaccinated against a contagious disease
B
Dumping waste into a river
C
Smoking cigarettes in a public park
D
Driving a car during rush hour
Verified step by step guidance1
Step 1: Understand the concept of externalities. Externalities occur when a person's actions have effects on third parties that are not reflected in market prices. These can be either external costs (negative externalities) or external benefits (positive externalities).
Step 2: Identify the nature of each activity in terms of externalities. For example, dumping waste into a river typically imposes costs on others (negative externality), while smoking in a public park can harm others through secondhand smoke (negative externality).
Step 3: Analyze the activity of getting vaccinated against a contagious disease. This action not only protects the individual but also reduces the likelihood of spreading the disease to others, thereby providing a positive external effect on public health.
Step 4: Compare the activities to determine which one provides a positive externality. The activity that benefits others beyond the individual engaging in it is the one with an external benefit.
Step 5: Conclude that getting vaccinated is most likely to result in an external benefit because it helps prevent disease transmission, benefiting society as a whole.
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